Inspecting the Vicom Story – Part 2

Okay, in the last post, we discussed the basic stuff about Vicom. It is hugely cash generative and we are getting it at low teens PE, 13x to 16x PE for a 30% operating margin, 20% ROE business. This is really not expensive, albeit the growth angle could be questionable. Singapore is a mature economy, our vehicle population is maxed out, we don’t have enough roads for more cars. So how to grow?

Maybe Vicom is cheap because there is no growth. Or is there really no growth?

This is where it gets interesting. In stock investing parlance, we call it optionality. Optionality refers to potential upside that is there but we do not know if they would materialize. Usually, if they do, it means a lot more upside but if they don’t there is also not much downside. It is said …

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A decade ago, a half-hearted blogger, amateur photographer, self-proclaimed audiophile, basic yoga trainee and aspiring analyst decided to put down his thoughts on investing. It was a journey that led to a lot of writing, a lot of thinking, some high level intellectual discussions that seek to understand the truth of matters, how the world works and how to strategize solutions to solve complex problems.